The Paris Stock Exchange is expected to open positively, with the CAC 40 futures rising 6.5 points to 7800. Market confidence is bolstered by the absence of new U.S. tariffs, benefiting luxury stocks. Wall Street is also rallying, with the Dow surpassing 44,000 points. Investors are eager for upcoming earnings reports from major companies, particularly in tech, while bond yields are slightly declining. Oil prices are retreating amid increased U.S. production signals.
Paris Stock Exchange Set for Slight Gains
The Paris Stock Exchange is poised to open on a positive note this Wednesday morning, as the influence of recent political developments begins to wane. Investors are now shifting their focus towards an upcoming wave of corporate earnings reports.
As of 8:15 AM, the CAC 40 futures contract for February delivery has increased by 6.5 points, reaching 7800 points. This indicates a continuation of the upward trend observed in previous sessions.
Market Reactions and Earnings Outlook
Market participants are feeling reassured by the lack of significant announcements regarding new tariffs in the United States, which has positively impacted the luxury sector. On Tuesday, the Paris market recorded its sixth consecutive day of gains, climbing 0.5% to close at 7770 points.
The optimism surrounding Donald Trump’s presidency has also invigorated Wall Street, pushing it closer to the record highs achieved in December. The Dow Jones surged by 1.2% on Tuesday, surpassing the 44,000 points threshold, while the S&P 500 rose nearly 0.9% to settle above 6000 points.
Investors remain hopeful about tax reductions and deregulation measures promised by the new administration. However, some uncertainties linger regarding the actual rollout of trade policies. Michael Brown, a strategist at Pepperstone, notes, “Clarity on this point remains quite difficult to grasp.” He also points out that the worst-case scenario of universal tariffs seems to be off the table for now.
Looking ahead, the decisions made by the new administration concerning trade will be pivotal for market trends in the coming months. If announcements exceed expectations, heightened volatility could ripple through financial markets.
Brown adds, “The new administration has a vested interest in maintaining the upward trajectory of stock markets, especially as Trump has taken the Dow’s performance as a measure of success.” In this context, the forthcoming quarterly earnings reports are expected to significantly influence Wall Street’s direction.
After a week of relatively promising results from major American banks, the markets are keenly awaiting further disclosures to gauge the health of S&P 500 companies. Notably, Netflix has just reported its best quarter ever in terms of subscriber growth, which has led to a pre-market surge of over 14% in its stock.
Today’s earnings reports from established firms like Johnson & Johnson and Procter & Gamble will provide additional insight into the economic landscape. Investors are particularly eager for results from tech giants such as Apple, Meta, and Microsoft, which are anticipated next week to potentially reignite bullish sentiment in the sector.
The performance of these tech companies will be under close scrutiny and must align with current high valuations to maintain investor confidence.
In the bond market, long-term interest rates are experiencing a slight decline, attributed to Trump’s inauguration speech lacking specific details on new tariffs. The yield on the German ten-year Bund has eased to approximately 2.49%, while the corresponding French OAT has decreased by 2.5 basis points to 3.27%, narrowing the France/Germany spread below 80 points.
The ongoing ambiguity surrounding trade issues has also provided relief to the bond market, with the yield on ten-year Treasuries dipping by four basis points to 4.57%.
As for the euro, after a recent rebound above 1.04 dollars, it is stabilizing this morning around 1.0415 against the U.S. dollar.
On the commodities front, oil prices are retreating once more. The “energy emergency” declared by the U.S. president signals increased oil production, which may exert downward pressure on future prices. Brent crude is down 0.3% at $79, experiencing profit-taking after recently exceeding $80, while West Texas Intermediate (WTI) crude has declined by 0.5% to $75.5.